Visa and Mastercard execs grilled by senators on 'duopoly,' high swipe fees

Published On Nov 19, 2024, 5:40 PM

Visa and Mastercard executives faced tough questioning from U.S. senators regarding their control of the credit card market and the high interchange fees that they charge retailers. These fees, which are often seen as excessive, contribute significantly to retail costs and ultimately impact consumer prices. Senators from both parties are pushing for the Credit Card Competition Act, which seeks to increase competition in the payment processing market by allowing retailers to choose different payment networks. The hearing followed high-profile concerns from the National Retail Federation that these swipe fees add inflationary pressure to the economy. Visa and Mastercard defended their practices, citing the need for financial stability and fraud prevention.

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Stock Forecasts

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Negative

The scrutiny from the Senate and the proposed legislation could lead to lower fees or increased competition, which may negatively impact Visa and Mastercard's revenue and profit margins in the near term. These legislative changes could create uncertainty regarding future earnings.

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Negative

Mastercard could also face similar headwinds as Visa due to the overlapping business model and its reliance on interchange fees. With mounting pressure from lawmakers and potential regulatory changes, short-term profitability may be at risk.

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